Bitcoin: Watch For 30K Fakeout?
Price has reversed off the high probability support zone that I wrote about on here a week earlier. The complex reversal setup that I described in that article (two days earlier) appeared and confirmed on Tuesday at 28K. I shared the specific trade orders privately Tuesday evening when Bitcoin was pushing 28,400. That swing trade idea produced a 1500 point profit if it was managed properly. If you missed that, and wondering if NOW is a good time to buy, the answer is NOT at these levels because of the sharp increase in risk. Let me explain.
First, there is an important lesson to learn about the order placement that I specifically called at the 28K level. By t he time I was able to send out the entry price, stop and take profit, Bitcoin was at 28,400 which was 400 points more than the system entry. What to do in these situations? Place a market order and get in at a worse price and adjust your position size to compensate for the increase in risk? That is one possibility which I mentioned specifically but that is a decision that only you can make. The other more conservative choice was using a limit order below the market in an attempt to capitalize on price noise.
While I mentioned the first choice was adequate (but up to you), I went with the second choice with a buy limit at 28K. Often this technique will result in a missed trade because if price momentum is strong, it never retraces. While many fret over missed trades, there is NOTHING wrong with them since there are always more trade opportunities.
So which one of these choices was better? IF you had taken the 28,400 price with a market order, and stuck to the take profit of 29,500, this trade resulted in 1000+ point profit. IF you chose the limit order at 28K, initially it looked like you missed the move UNTIL the next day when for some random reason, Bitcoin sold off, went below 28K and then back above the 29,500 take profit level (where it is now) without stopping out. Both trades generated a decent profit, but the more conservative trade offered a greater profit for less risk. And for those most enamored with greed, if you were really on top of these orders, you actually could have taken both trades since one occurred one day before the other.
The lesson here is this: when it comes to relatively smaller time horizons (like a few days), this is really a game of probabilities vs. risk. Proper order placement is key when it comes to maximizing the PROBABILITY of profit, NOT the amount of profit while at the same time optimizing risk. Most novices take order placement for granted and do not realize that you can improve your probabilities this way because it minimizes "YOU' from the equation. In my recent streams, I have been talking about using tools like the ATR to better determine stop and take profit prices to further improve this part of your process.
As far as Bitcoin trades now: Price is probing the 30K RESISTANCE AREA. In terms of probabilities, it is reasonable to anticipate that selling activity is more likely here. That means LOW expectations for longs over the next week. At the same time, shorts are also considered aggressive because they are counter to the broader BULLISH trend which is still intact. The upper blue square on the chart represents a high probability AREA for a bearish reversal or failed high. The two choices I would consider now are: stay small with low expectations or stay out.
Most people (particularly frauds) obsess with forecasting the future. Price will be "HERE" by some specific time. If you instead took the time to understand what efficient markets means, you will quickly realize there is NO WAY to accurately forecast the future especially for longer time horizons.
LESS is more in this game. All the information you need to make reasonable judgements exist on a simple price chart. You just have to learn how to value the relevant information that is available and evaluate it from a perspective of probabilities.
Thank you for considering my analysis and perspective.
First, there is an important lesson to learn about the order placement that I specifically called at the 28K level. By t he time I was able to send out the entry price, stop and take profit, Bitcoin was at 28,400 which was 400 points more than the system entry. What to do in these situations? Place a market order and get in at a worse price and adjust your position size to compensate for the increase in risk? That is one possibility which I mentioned specifically but that is a decision that only you can make. The other more conservative choice was using a limit order below the market in an attempt to capitalize on price noise.
While I mentioned the first choice was adequate (but up to you), I went with the second choice with a buy limit at 28K. Often this technique will result in a missed trade because if price momentum is strong, it never retraces. While many fret over missed trades, there is NOTHING wrong with them since there are always more trade opportunities.
So which one of these choices was better? IF you had taken the 28,400 price with a market order, and stuck to the take profit of 29,500, this trade resulted in 1000+ point profit. IF you chose the limit order at 28K, initially it looked like you missed the move UNTIL the next day when for some random reason, Bitcoin sold off, went below 28K and then back above the 29,500 take profit level (where it is now) without stopping out. Both trades generated a decent profit, but the more conservative trade offered a greater profit for less risk. And for those most enamored with greed, if you were really on top of these orders, you actually could have taken both trades since one occurred one day before the other.
The lesson here is this: when it comes to relatively smaller time horizons (like a few days), this is really a game of probabilities vs. risk. Proper order placement is key when it comes to maximizing the PROBABILITY of profit, NOT the amount of profit while at the same time optimizing risk. Most novices take order placement for granted and do not realize that you can improve your probabilities this way because it minimizes "YOU' from the equation. In my recent streams, I have been talking about using tools like the ATR to better determine stop and take profit prices to further improve this part of your process.
As far as Bitcoin trades now: Price is probing the 30K RESISTANCE AREA. In terms of probabilities, it is reasonable to anticipate that selling activity is more likely here. That means LOW expectations for longs over the next week. At the same time, shorts are also considered aggressive because they are counter to the broader BULLISH trend which is still intact. The upper blue square on the chart represents a high probability AREA for a bearish reversal or failed high. The two choices I would consider now are: stay small with low expectations or stay out.
Most people (particularly frauds) obsess with forecasting the future. Price will be "HERE" by some specific time. If you instead took the time to understand what efficient markets means, you will quickly realize there is NO WAY to accurately forecast the future especially for longer time horizons.
LESS is more in this game. All the information you need to make reasonable judgements exist on a simple price chart. You just have to learn how to value the relevant information that is available and evaluate it from a perspective of probabilities.
Thank you for considering my analysis and perspective.
Try Trade Scanner Pro for FREE: bit.ly/TSCPRO
Free Signal Every Week: bit.ly/signalwk
My discord community: bit.ly/inviteme2
Trade Bybit: bit.ly/bybreg
Tip With ETH: 0x94c9338fc3A9Ba0F1F930BF4e724C0A3EBB8437E
Free Signal Every Week: bit.ly/signalwk
My discord community: bit.ly/inviteme2
Trade Bybit: bit.ly/bybreg
Tip With ETH: 0x94c9338fc3A9Ba0F1F930BF4e724C0A3EBB8437E
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.